Britain Announces World’s First Public Register to Fight Money Laundering

In order to fight money laundering within the British property market, Britain’s Department for Business, Energy and Industrial Strategy introduced the world’s first public register that requires overseas companies which own or have the ability to buy property within the UK to provide details of their beneficial owners.  The British government is working towards publishing draft laws this summer in preparation for the register to go live by 2021.  Greg Clark, the British Business Secretary, stated that “This world-first register will build on our reputation for corporate transparency as well as help create a hostile environment for economic crimes like money laundering.”

The British property market has been a hot spot for money laundering with over 75% of its properties currently being investigated for the suspected use of offshore corporate secrecy, a popular strategy used by money launderers.  In addition, as reported by a government spokesperson, British properties worth up to $250 million have been under investigation since 2004 for suspected connections to corruption.

A public register would not only help decrease money laundering, but also bribery, tax evasion, tax avoidance, and drug trafficking.  Most of these offenses are committed through the use of an anonymous shell, which are companies operating under disguised ownership in order to continue conducting business without interference from the law.  With the implementation of a public register, details of ultimate owners must be provided, thus preventing illicit purchases and transactions.  Once the register is open, requiring updated information from beneficial owners is another way to enhance compliance.  For example, the UK system requires owners to update any changed information within 28 days of the initial change.  Providing false information can also be discouraged by putting sanctions and penalties into effect; i.e. presenting false information to the UK is considered a criminal offense and can result in fines and possible jail time.

Although there are clear advantages to having a public register for beneficial owners, there are disadvantages as well, with one being the publication of information that some would see as a violation of privacy laws.  When the UK was first considering a public register, one draft proposed that information given by the beneficial owners must include their full name, full birth date, nationality, residency, service address, and the date of which the beneficial owner obtained the interest, details of the interest obtained and how the interest is being held.  The publication of this information could be potentially dangerous, with the risk of blackmailing, identity thieves, and kidnapping being evident.  Fortunately, when the UK set up their register, sensitive information was not publicized.  Instead, information of beneficial owners were only made accessible if there was a case by case exemption made.  

Even though implementation of a public register would make money laundering and other illicit crimes more difficult, this would only work in the country it is implemented in.  In the event that public registers are not used globally by all countries, one who wishes to avoid providing their information could simply seek a market with looser regulations.  This would result in public registers putting said countries at a competitive disadvantage to countries who do not have this system in place.

Although there are some disadvantages to having a public register, it is still an important step towards strengthening anti-money laundering (AML) and anti-corruption efforts and stopping illicit funds from being funnelled through legitimate businesses and markets.  Clark added that Britain is “committed to protecting the integrity and reputation of our property market to ensure the UK is seen as an attractive business environment – a key part of our Industrial Strategy.”


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